Agenda item

Annual Report on the Treasury Management Service and Actual Prudential Indicators 2019-20 (Agenda item 9)

Report of Councillor Sarah Suggitt, Executive Member for Governance & Maxine O’Mahony, Executive Director, Strategy & Governance.


This report was discussed at the Governance & Audit Committee meeting on 17 December 2020 and recommended to Full Council for approval.


Councillor Cowen, the Executive Member for Finance & Growth presented the report.


The two reports had been discussed at the Governance & Audit Committee meeting on 17 December 2020 where both reports at agenda item 9 and 10 had been debated fully.  Many questions had been asked and were answered accordingly as could be seen from the Minutes. 


The Governance & Audit Committee had recommended various recommendations to Council for adoption.


One matter that had come across in both reports was the significant reduction both now and looking ahead on investment income which demonstrated that interest rates were likely to be held at 0.01% for some considerable time to come.    


Alison Chubbock, the Chief Accountant and Deputy S151 Officer was asked to continue with presenting the report.


In summary the first report agenda item 9, it was noted that the Council had not breached any limits, there was no borrowing need and all requirements had been complied with.


For agenda item 10, the Policy and Strategy had not changed from the current year and was fit for purpose. 


Accepting that the world was in a very difficult place at the moment, and on-going financial turmoil would surely follow, Councillor Birt had noticed that on page 66 of the agenda pack, revenue funding was going to be halved, however, this was prior to Covid and he asked if the Council had set itself up correctly in the first place.


Members were informed that revenue funding was not used very often and the reason it had been halved was due to the Council committing some funding for broadband for approximately £1m.  This was a one-off and hence the halving of the value.


Councillor Crane mentioned the 0.01% interest rates and was interested to know, as the Council had all these assets, what the average income interest rate the Council was receiving from these assets in comparison to what it would get in the bank.


Councillor Cowen stated that it would depend on the asset but as the Council held significant assets across the District and a strategy had been set for what income stream the Council might expect from each of those assets.  He was aware that this ranged from between 3% and 5% up to 8% or 9% on the capital effectively that the Council had invested in the buildings.  There was the potential to increase the Council’s revenue stream by holding property assets even in these difficult times.  Breckland Council would continue to invest in its District in order to grow and provide employment and see away out of the pandemic through further growth and investment throughout the District.


Councillor Atterwill heard what had been said about investment in property portfolios but asked Councillor Cowen if he agreed that there was a certain amount of risk too.


Members were informed that any investment, whoever made it, carried a risk, but that was the reason why the Council had an analysis carried out by the Commercial Property Team and took out a full risk assessment prior to the investment.  Most investments had been made pre-Covid therefore the events of the last 12 months were completely unforeseen.


Councillor Borrett, the Chairman of the Governance & Audit Committee pointed out that there was risk to any investment even putting money in the bank was a risk.  There was also a huge risk to Breckland’s services if it did not get the investment income that the Council used that was millions of pounds every year to support the services that Breckland offered.  If it left all of its investments in the bank, the return of 10p in a £1000 would massively reduce the income that the Council had to fund those services.  A balance of risk and reward would be one that he whole heartedly supported and believed that the risk profile of bricks and mortar assets that were based in Norfolk was something that the Council and all Members have had the opportunity to vote on many times and it had been the considered wish of the Council that it did hold a property portfolio that produced income and was used to pay for services for Breckland residents. 


Councillor Cowen said that when he took on this Portfolio he knew very little about finance in local Government but it became very clear the support of the Councils services was entirely reliant on revenue stream and not capital and as a consequence, the Council’s decision to invest its capital in bricks and mortar to a large extent had actually given the Council a revenue stream that enabled it to pay for its services to residents.  Authorities were not allowed to use its capital to pay for waste collections services or any other services it provided and more recently, central Government in their latest settlement at the end of last year, had limited the ability for local government to borrow money to invest for growth. 


With all this, the Council would be able to deliver a balanced budget in what had been a horrendous year.


After being proposed and seconded and subject to one abstention, it was:




1)     the actual 2019/20 prudential indicators within this report be approved; and


2)     the Treasury Management Stewardship report for 2019/20 at Appendix B and Appendix C2) of the report be noted.


Supporting documents: